COVID-19 Corporate Insolvency Update

On Wednesday 20 May, the Department for Business, Energy and Industrial Strategy introduced the new Corporate Insolvency and Governance Bill. The new Bill will create more opportunities to save companies in difficulty and offer better protection from creditors during the coronavirus. Under the Bill, UK companies will have access to new tools to restructure their debt in order to keep operating through the crisis.

What this means for businesses:

  • New corporate restructuring tools to the insolvency regime to give companies the time they need to maximise their chance of survival.
  • Temporary suspension of parts of insolvency law to support directors during this difficult time.
  • Temporary easements on filing requirements and AGMs will include more flexibility around when and how AGMs are held, and extensions to deadlines for: confirmation statements, accounts, registrations of charges (mortgage), event-driven filings, such as a change to your company’s directors or people with significant control.

You cannot, for now, present a winding-up petition against a company based on a statutory demand that was served between 1 March 2020 and 30 June 2020 (or one month after the Bill comes into force, if later), or based on the company’s inability to pay its debts unless you have reasonable grounds for believing COVID-19 has not had a financial effect on the company or the debt issues would have arisen anyway.

The Bill was introduced on Wednesday 20 May and will now make its way through Parliament. Many of the measures in the Bill will need secondary legislation before they come into force, and this will be introduced in due course.

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